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The More Things Change, The More They Cannot Stay The Same – Part Two

As mentioned in our last posting - "The More Things Change, The More They Cannot Stay the Same" - two years ago, Klaus Enzenhaufer, Director of Technology at Dynatrace and formerly at Compuware, wrote an article identifying five major pitfalls that financial services providers encounter as they extend their digital channels. Last time we looked at quality and speed. This week, we take a look at user experience, control, and running in place.

The Holistic View of the User

In 2014, Enzenhaufer predicted that as functionality grew within digital channels, financial services providers were going to need to take measures that would provide them with a more holistic view of the user experience both within the session and across devices.

According to him, instead of just using a single metric - e.g. "login time" - to determine user satisfaction, organizations needed to measure performance for complete transactions and the most common customer paths for doing specific tasks; e.g., making a purchase, reviewing a balance, paying bills. Within the context of the whole transaction, one slow step is all it takes to damage the cumulative experience.

Also, consistency across the digital devices that customers use is key. Placing navigation or action buttons in different places depending on whether the user is on a PC, smartphone, or tablet is commonplace and sure to lower customer satisfaction. The disparate systems used to provide services via digital channels and third party outsourcing are the primary culprits for the suboptimal view to the entire user experience presented by most companies today.

In many cases the remedy for this condition is non-trivial as the issues may reside in the architectural design of the various solutions being used. Companies who are serious about addressing this will need to consider their overall strategy for providing services through their digital channels and, in particular, consider a technology overhaul that is built around utilizing API-driven solutions that allow them to control the user experience and data being generated across all digital devices from the laptop to the wearable.

Control Freaks Needed

Ezenhaufer also predicted that as the market moved to offering rich contextual experiences based on user attributes such as location and other personalization strategies, financial services providers would need to establish partnerships that would enhance their ability to deliver these value adds in a timely fashion. Today, we read with regularity about the formation of these types of arrangements between the established financial services providers and what have become known as FinTech companies.

However, these arrangements are presenting challenges of their own because too often, especially in the banking business, control of the customer's experience and the data associated with his or her activity is surrendered by the customer's bank or credit union to the third party. The fact that this is the most common model used in these partnerships presently is not to suggest these financial institutions (and other organizations caught in this trap) do not want something better. Most of them are stuck in this model because the legacy solutions in the industry do not and/or cannot offer options.

To quote Ezenhaufer: "The irony is that poorly-performing third-party services can degrade an entire user experience. So they may not be worth using once you analyze the big picture of end-user experience that includes all players." If the third parties are going to continue to be part of the digital landscape, and they are, then the financial services providers depending on these third parties must control the entire user experience and associated data. Being able to do this effectively requires the same type of technology overhaul described above.

The Definition of Insanity

The final insight offered by Enzenhaufer has to do with the dangers financial service providers face when electing to run in place. As hard as it is to believe, the most common model for deploying digital services in 2014 (when Enzenhaufer wrote the article) and now remains the use of siloed systems to address the growth of digital device types and services.

This model is unsustainable due to the cost, complexity, and inflexibility inherent in it. That is why, in today's competitive marketplace, one of the biggest mistakes that a financial services provider can make is playing it too safe; i.e., defaulting to keeping things the way they are and avoiding innovation. It is not a stretch to suggest that the organizations doing this are repeating the same thing over and over again but expecting a different outcome, which is a popular definition of insanity.

While often this approach seems like the safest choice, especially since these solutions are offered by established legacy providers in financial services, the fact is, as Gartner and others have noted, unless organizations look at emerging providers with modern architectures, they are at risk of losing their competitive leverage and the bulk of their customers.

Financial services providers who want to avoid the pitfalls identified by Enzenhaufer will need to fight a battle on several fronts. These challenges will not occur as singularities but, because of resourcing, budgets, and other priorities, most organizations will have to attack them two or three at a time. All of them that wish to be successful will need a digital strategy that gives them the flexibility they need to navigate a constantly changing terrain.

Increasingly, organizations are turning to providers that have – over decades – been able to assess the landscape then advise and assist clients in deploying vertically integrated solutions that deliver this flexibility. When evaluating their options relative to such vendors, financial services providers will want to focus on providers with expertise. Sometimes these organizations are hard to find because the landscape is crowded with large generalist firms. However, the search is worth it as it is these smaller, expert firms that can map a path past the Enzenhaufer pitfalls and the other challenges that await.